Base Oil Price Report


The bad news is that the already tight market for naphthenic base oils is being squeezed further by a spate of refinery shutdowns – some planned, some not. The good news is that two suppliers will add approximately 3,000 barrels per day of capacity by the beginning of August.

On the paraffinic side of the market, Sunocos Tulsa, Okla., plant resumed full-scale production of bright stock this week after repairing a deasphalting unit damaged by fire in March.

Valero Energys naphthenic plant in Three Rivers, Texas, is closed for an upgrade being made in cooperation with Swedens AB Nynas Petroleum. The plan, announced one year ago, calls for Valero to fund a $10 million upgrade and debottlenecking. In return, Nynas has entered a long-term agreement to buy and market all of the plants output.

The upgrade is being undertaken to increase oxidative stability and reduce levels of impurities in the oils produced at the plant. The companies have said that the expansion will boost capacity – currently 2,300 b/d – by 50 percent.

The companies have not said how long the plant will be closed, but Nynas says it plans to begin marketing the upgraded oils by Aug. 1.

San Joaquin Refinings Bakersfield, Calif., plant suffered an unplanned five-day shutdown last week due to problems with a hydrotreater. Normal operations have resumed, but the plant is also scheduled for a 20-day turnaround and expansion beginning July 1. Officials say the project includes installation of a second hydrotreater and that capacity will rise from 7,300 b/d to 9,300 b/d.

Cross Oil and Refining Co. also lost five days of production this month after its plant in Smackover, Ark., was knocked out by a storm.

The demand-supply balance for naphthenics had been tight since late winter, due to the closure of two Shell plants that removed 20 percent of U.S. naphthenic capacity. Observers say supply has been strained further by the recent disruptions – to the point that some suppliers have temporarily had to send customers elsewhere.

We were already tight, but these events have made things really tight, one marketer said.

Bright stock production at Sunocos Tulsa plant has been hampered since a deasphalting unit in the refinery complex was damaged in a March 23 fire. The problems were severe enough that the company declared force majeure, a legal term used when uncontrollable events keep a company from meeting contractual obligations. Production of other grades of base oil were unaffected.

The company said the deasphalting unit has been completely restored, andit lifted its force majeure declaration this week.

Posted prices for paraffinic base oils were unchanged this week. The price of crude oil on the New York Mercantile Exchange closed yesterday at $37.52 per barrel, up 46 cents in the past week.

Historic U.S. posted base oil prices and WTI and Brent crude spot prices are available for purchase in Excel format.

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